CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

A 182-day U.S. Treasury bill has a face value of $100,000 and currently sells for $98,500. Which of the following yields is most likely the lowest?

A. the bank discount yield
B. the money market yield
C. the holding period yield
Correct Answer: C

The holding period yield is: (100 - 98.5) / 98.5 = 0.015228. This is less than the bank discount yield: ((100-98.5) / 100) x (360 / 182) = 0.02967. It is also less than the money market yield: (360 x 0.02967) / (360 - 182 x 0.02967) = 0.030122

User Contributed Comments 5

User Comment
Chl4072 Why the note never explain money market yield and bank discount yield...?

Too simplified...
idzani Assumed knowledge included in this question. I guess this question would be more applicable in the later stages of the course
Apoorv34 I think Calculation of Money market Yield is wrong.
It's HPY * 360/days.
choas69 holding period return should 98.5-100/98.5 why is it the opposite ?
sunxx320 @choas69: Face value actually means the 'future value' here. So face value of 100K is in time period t. Currently sells for 98.5K is in time period t-1. That's why the equation is 100k-98.5k.
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